Today: Another steep drop by Apple (AAPL) on Wall Street takes its market cap lower than $500 billion for the first time in nearly six months. Also: More dreary earnings results from the personal computer sector as Wall Street falls again.

Apple falls out of $500-billion club despite strong financials

Apple's prolonged stock weakness, which has already sent it into "bear market" territory, has now expelled it from one of the loftiest perches on Wall Street: The $500-billion club.

With a 2.1 percent decline Thursday, Apple closed with a market capitalization -- the total value of all shares in a company -- lower than $500 billion for the first time since mid-May. Apple's closing price of $525.62 gave it a market cap of $494.5 billion.

Apple became just the sixth U.S. company to post a market cap higher than $500 billion in late February, just before the March release of the third-generation iPad, and had stayed above the mark since a decline in late April and early May.

In the time Apple's market cap was higher than $500 billion, it didn't stay just above that line, it flew much higher. The Cupertino tech giant established a record for highest market cap in history for a U.S. company -- without adjusting for inflation -- and eventually pushed higher than $660 billion.

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However, the last two months have not been kind to Apple: A shakeup in its executive offices, a reported decline in market share in the tablets sector that it has dominated, analyst angst and consumer anger at aspects of the iPad Mini and fourth-generation iPad launch, and production concerns have weighed on Apple and its stock price, leading to doubts.

"Everybody and their dog owned or wanted to own this stock, which was always a red flag to me,'' Jack Hillis, a San Jose investment adviser who owns Apple shares, told Mercury News reporter Patrick May. "When it was around $680, I had clients calling me and asking 'Is it going to $1,000?' And that concerned me, because it seemed like every institution already owned it, and since most institutions are limited in the amount of a security they can hold, who were the new buyers who were going to keep pushing it higher?"

However, analysts and Apple's earnings still show it to be a threat to rebound to its previous levels. Apple's price-to-earnings ratio sits below 12, which is well below the level of companies like Microsoft (P/E of 14.4) and Google (GOOG) (P/E of 20.3). Analysts expect that ratio to grow: Of 54 analysts tracked by MarketWatch, none believe investors should sell the shares and only six rate Apple a "Hold." The average price target of the analysts -- the price at which they believe investors should sell the stock for maximum return -- rested at $774.44 Thursday.

Apple's current weakness may have more to do with investors who have grown to expect too much from the most valuable company in the United States.

"Apple's had a tremendous rise, but as it becomes a more mature company we have to temper our expectations a bit," San Jose financial adviser Dave Samuels said Thursday. "But Apple's our baby -- it's in our backyard, it's sitting on tons of cash, it makes great products, and Steve Jobs was a genius, so we have a higher bar for its stock price than we do, say, for Microsoft. So when Apple trips, everyone thinks "My god, what's going on here?'"

While Apple struggles, the industry that has been most affected by its rise still looks on with jealousy. Personal-computer companies that have failed to keep up with the mobile-device revolution continued to report poor performances and get punished on the markets Thursday.

The No. 2 PC maker in the United States, Dell, reported that income dropped 47 percent year-over-year as enterprise spending dwindled due to a tough global economy.

"It's not clear what's going to cause (corporate customers) to increase their spending in the short term, given the uncertainty in the economy," Chief Financial Officer Brian Gladden told Reuters.

Companies that make chips for PCs have slowed down their manufacturing in response to lowered demand for PCs worldwide, from businesses as well as consumers focused on mobile-computing devices. Santa Clara's Applied Materials, the leading manufacturer of parts that manufacture chips, reported revenue in its most recent quarter of $1.65 billion, down from $2.18 billion in the year-ago period. The company lost 42 cents a share in the quarter, compared with earnings of 34 cents a share a year ago.

Overall, indexes continued a slow slide Thursday, with slight losses across the board fueled by mixed retail forecasts and further economic concerns.

While Wal-Mart, Pleasanton's Ross Stores and Limited Brands projected holiday sales that underwhelmed Wall Street investors, Target and San Francisco-based Gap presented strong forecasts. But continuing U.S. debate on the "fiscal cliff" and a European economy that has again plunged into recession stifled any positive momentum.

There were some successes in Silicon Valley, however, as Sunnyvale data-storage company NetApp rose 11.4 percent after its earnings report and Zynga popped 7 percent higher despite the loss of yet another executive to a different social-networking company.

And the widely watched Standard & Poor's 500 index: Down 2.16, or 0.16 percent, to 1,353.33

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.